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Defra quizzed by public accounts watchdog over PFI waste projects

Two senior Defra officials have been questioned by MPs from the Public Accounts Committee over the Department’s private finance initiative (PFI) waste policy, with the need for energy-from-waste plants coming under intense security. Hearing

At the hearing in Westminster on 25 June Defra’s Secretary, Bronwyn Hill, and Director of Resource, Atmosphere and Sustainability, Colin Church, were grilled over a National Audit Office (NAO) review of Defra’s awarding of three PFI contacts.

The NAO review had published Defra’s oversight of three Local Authority PFI waste contracts involving Surrey, Norfolk and Herefordshire and Worcestershire county councils. All three projects had experienced delays stemming from a range of problems including difficulties obtaining planning permission, uncertainty over technology and local opposition.

There was particular concern about Defra paying PFI credits to the councils for hitting targets, such as recycling rates, even though infrastructure had not been delivered. For example, in Surrey during the first 15 years of the contract Defra paid a total of GBP 124 million even though not all of the planned facilities had been built.

Energy-from-waste

MPs also questioned Defra’s commitment to long and costly energy-from-waste developments. They argued that in light of the improvements in recycling and falling waste arising, locking large sums into credits for waste incineration did not constitute value for money for the taxpayer.

The Labour MP for Barking & Dagenham, Margaret Hodge, commented that it was “daft” to build new waste infrastructure in the UK, when it was possible to sell waste as a fuel to countries such as Germany and Holland and stated “we are stuck in a decision we took 20 years ago”.

But Ms Hill defended Defra’s support for council PFI contracts and maintained that Defra had helped to stimulate the market for energy-from-waste projects in the UK where Local Authorities had previously failed to attract finance.

Mr Church added that the support Defra gave to the developing of the energy-from-waste market with the PFI scheme was essential for the development of the sector and to ensure the meeting of the landfill diversion targets. He commented “if we hadn’t given the market, the construction firms and the waste operators the kind of certainty we did, the energy- from-waste plants would not have been built”.

Norfolk

MPs focused much of the questioning over Norfolk county council’s aborted residual waste contract, for which Defra had agreed to provide GBP 91 million in PFI funding in 2012.

The funding was withdrawn in 2013 following Defra’s u-turn over waste treatment capacity. Norfolk subsequently cancelled the contract, as it has yet to achieve planning permission for the energy-from-waste facility that would have been used to service the deal.

Withdrawal of the funding only came after Norfolk county council had signed its waste treatment contract with the contractor Cory Wheelabrator, and despite Defra itself raising doubt over the timetable for completion of the project.

As a result, Norfolk is now liable to pay the contractor more than GBP 30 million in compensation. MPs criticised Defra over its role in advising the council on the contract, and why it chose to press ahead with funding for the scheme, only to withdraw it a year later. They added that Defra ought to have exerted more influence on the authority over its concern that the project may struggle to gain planning permission within the council’s proposed timescale.

In response Ms Hill commented that “we were very clear with Norfolk. I regret that public money has been wasted. They were aware of the significant local opposition to the project, but went into that with their arms open”.

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